Heineken is a brand that's known around the world. Although the stock has done incredibly well throughout recent years, it may be headed for slower growth. At least, that's what one analyst thinks. Recently analysts from RBC Capital weighed in; downgrading the stock. Today, we'll provide the details of the downgrade, discuss what other analysts think of the stock, talk about what we can expect moving forward and discuss how binary options traders can take advantage of the trends.
Details From The RBC Capital Downgrade
While RBC Capital made it very clear from a research note that they downgraded the stock, there was unfortunately little information provided as to why. Nonetheless, the research firm downgraded Heineken from an “outperform” rating to a “sector perform” rating; ultimately insinuating that Heineken offers a bit more downside risk than previously expected. Although RBC didn't make it clear as to why they downgraded the stock, I have a couple opinions of my own. First off, after exponential growth for quite some time the stock is trading at quite the premium. As a matter of fact, the current PE ratio on the stock is over 29% according to Guru Focus. Considering that a healthy PE is no higher than 17, this could lead to quite a bit of resistance in the future.
Also, economic conditions around the world are changing; and unfortunately, it's not for the better. This is likely to affect stocks with a recreational focus. Considering that Heineken's flagship product is beer, the company definitely falls into that category. The bottom line is that as economic conditions worsen, consumers are going to need to find ways to spend less money; and one of the first things they're likely to do is stop drinking alcohol. Nonetheless, other analysts seem to have a more positive opinion on the stock…
What Other Analyst Think About Heineken
Recently, several analysts have weighed in on Heineken stock; and most of them have an overwhelmingly positive opinion as to what we're likely to see moving forward. For example…
- KBC Securities – KBC Securities released a research report on Monday, August 3rd. In their research report, they upgraded the stock from a “hold” rating to an “accumulate” rating.
- Citigroup – On Friday, July 10th, Citigroup released a research report; also upgrading the stock. Citigroup's upgrade brought Heineken's rating from a “neutral” to a “buy”.
- JPMorgan Chase & Co – Finally, JPMorgan Chase & Co increased gtheir rating on the stock from a “neutral” to an “outperform” in a research note dated April, 21st.
What We Can Expect To See Moving Forward
In my opinion, we're likely to see relatively flat movement going forward. The reality is that economic times are changing; and I don't think Heineken will be able to avoid the pain associated with poor worldwide economic activity. However, the company does have a history of solid performance; which should also be taken into account.
How Binary Options Traders Can Profit From The Trends
Recently, Heineken has traded steady between $42.67 and $42.35; and I don't think the stock is likely to break support or resistance any time soon. With that said, binary options traders can find profit in both direction. Simply watch the chart! When the price nears $42.67 it's time to purchase put options. Adversely, when the stock nears $42.35, it's time to start purchasing call options. So, no matter which way it's going, there are profits to be made!
What Do You Think?
Where do you think Heineken is headed and why? Let us know in the comments below!
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